November 24, 2022
  • November 24, 2022

SNB’s Maechler: Rates will be raised if forecast inflation exceeds target

By on November 17, 2022 0

GENEVA, Nov 17 (Reuters) – The Swiss National Bank will raise interest rates further if it finds that inflation projections exceed its target level, SNB board member Andrea Maechler said on Thursday.

The SNB appears to be preparing for further interest rate hikes after already raising rates twice this year to 0.5%. Although Swiss inflation declined to 3.0% in October from 3.3% in September, it remains high by Swiss standards.

“Our mandate is to bring down inflation and we will use the tools we have to do that,” Maechler said at a financial markets event in Geneva.

“If we see our inflation forecast above 2%, we will continue to raise rates,” she said, adding that the SNB would review the situation at its next policy meeting in December.

On Monday, SNB Chairman Thomas Jordan issued another rate hike warning, saying it was likely the central bank would have to act again as inflation was expected to remain high.

“Inflation started out as shocks, but it’s not just shock-driven anymore,” Maechler said. “We see inflation as likely to be more persistent.”

“It is very important that we maintain focus on implementing policies to achieve price stability in a consistent and sustainable manner.”

Regarding the Swiss franc exchange rate, she said an appreciation of the currency “has actually helped us keep our inflation much lower than in some of our neighboring countries.”

“It’s something we continue to monitor very closely.”

The SNB stood ready to intervene in the foreign exchange markets, if necessary.

“We are prepared – should the exchange rate rise too quickly, too high – to use intervention to buy foreign currency,” she said.

“We are also prepared, if the exchange rate becomes too weak, to sell the exchange rate but we are not yet ready to reduce our balance sheet as a policy in itself. This is not the right time.”

Reporting by Paul Carrel; Editing by Kirsten Donovan

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